A history of adverse credit makes borrowing money far more difficult because filing chapter 7 shows on a credit report for the next 10 years. However, scores don't stand still so it is possible to improve post bankruptcy credit scores, fix bad credit ratings and qualify for loans, credit cards and mortgages more quickly than might be anticipated. Whilst bankruptcy credit repair won't happen overnight and finance will be more expensive, getting credit after bankruptcy isn't actually that difficult.
Fix Bad Credit By Eliminating Credit Report Errors
The information held by Experian, Equifax and TransUnion isn't necessarily as accurate as might be anticipated. It is important that discharged bankrupts check their post bankruptcy credit in case agreements that have already been eliminated continue to show as active. The Fair Credit Reporting Act gives consumers - or an appointed credit repair attorney - the opportunity to correct these issues. Supporting information that shows that the debts were included in the bankruptcy must be provided so that any corrections can be performed as expediently as possible.
Improve Post Bankruptcy Credit Ratings By Reaffirming Credit
Under the 2005 bankruptcy laws, it is necessary to reaffirm any secured debts - such as a mortgage or car loan - in order to avoid their eventual repossession and sale. This not only allows consumers to keep their possessions, installment debt provides an opportunity to fix bad credit. Lenders report punctual repayments to credit reference agencies at month end so making a series of punctual car, mortgage and student loan repayments will lead to a slightly better credit score with each passing month. Fail to comply and the bad credit repair process and it will need to start from scratch.
Get a Credit Card After Bankruptcy to Rebuild Credit
It isn't only necessary to have a source of installment debt to improve post bankruptcy credit, a source of revolving debt - a post bankruptcy credit card - is also needed to fix bad credit more quickly. Although there are a number of unsecured cards, the credit limit is normally very low. This can present an issue when rebuilding bad credit because it is necessary to avoid using more than 30% of the allocated credit limit in any given month. For this reason, a secured credit card is the preferred option because the provision of collateral means that customers are offered a higher credit limit.
A Higher Credit Score Rating After Bankruptcy
Getting credit after bankruptcy is already possible, but the rate of APR will be extremely high due to the risk of default. Cleaning up a post bankruptcy credit report involves correcting errors and removing erroneous data. It is also necessary to make a series of timely repayments in relation to both installment and revolving debt. In order to get a better credit score, never miss or make late payment. Also, try to avoid using more than 10% of the allocated credit limit of a card in a single month. If these guidelines are adhered to, it may be possible to get mortgages after bankruptcy in less than 3 years.
Sources
Harelik, Justin. (Nov 26, 2008). "7 steps to take after bankruptcy." MSN Money
Asa Ghaffar - Asa has over 10 years of practical experience in loan approval, secured lending, bad credit repair, stock trading and debt management.
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